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Overdraft debt

How can I stop living in my overdraft?

Overdrafts are an expensive form of debt and there are several good reasons to avoid them. Here are some practical steps to help you escape the cycle.

You could:


  • Gradually reduce your overdraft
  • Use a credit card or savings to pay it off
  • Separate your overdraft from your day-to-day banking

Are you using overdraft to boost your income? There are other ways to do this.

An overdraft is good if you need funds in an emergency. But it is an expensive way to borrow.

It is best to:


  • Look for cheaper sources of income
  • Use your overdraft as a last resort

How can I stop living in my overdraft?

It is easy to forget that overdrafts are a form of debt. Especially if you live in it.

This can be:


  • A problem that built up over time or
  • Because of a large one-off payment

Getting out can seem impossible but we are here to help.

Getting out of my overdraft – where do I start?

It can take a while to get out of your overdraft. It depends on:


  • How much you use it, and
  • How much you borrowed

Start with these steps:


  • Stop using your overdraft if you can
    • Stop using it if you do not need it to survive
    • Start paying it off a soon as you can
  • Create (or review) your budget
    • Work out what your income and spending is
    • Be detailed
    • This is vital when in the next steps
  • Speak to the people you owe
    • They could agree to reduce your overdraft limit over time
    • They may be willing to stop interest and charges for a while

Are you going into your overdraft every month? It may be a sign that you need free, expert debt advice.

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Next steps

Start taking action to pay off your overdraft.

Here are some methods you could use:

1. Reduce your overdraft use over time


  • Look for savings in your budget to reduce your monthly spending
  • Try not spend all your overdraft each month
  • Talk to your lender about monthly payments
    • Make sure the amount you pay is enough to get you out of your overdraft

2. Repay the balance using credit with a lower interest rate

You could either:


  • Transfer the balance to a credit card with a lower interest rate
    • Do not spend anything else on your new card
    • Shop around to get the best deal, and use a price comparison site to help you
    • Check you are eligible before applying, as applying for more credit may appear on your credit file
  • Use an affordable loan with lower interest to pay off your overdraft
    • Then pay back the loan with a set monthly repayment

3. Shift your Direct Debits


  • Change your Direct Debits and standing orders to go out at the same time
  • Schedule them soon after when your income arrives
  • This helps you know what you have to spend

4. Separate your overdraft from day-to-day banking


  • Ask your bank if you can set up a new account with no overdraft
  • Use this for your day-to-day banking
  • Treat your existing overdraft as a simple debt to pay off gradually
    • This can make it easier to stop falling into your overdraft

5. Use savings to clear your balance


  • Using savings to pay your overdraft saves you money in the long term.
  • This is because:
    • Your overdraft has high interest and charges
    • Your savings account does not gain much interest in comparison

What do I do after I pay off my overdraft?

Once you pay off your overdraft, ask yourself if you should really keep it.

How safe do you feel not to use it unless you need it?

Protect yourself by asking your bank to:


  • Reduce your overdraft, or
  • Remove it

You could also switch to another bank that offers a basic bank account with no overdraft.

Is there anything else I need to think about?

Our tips to reduce your overdraft should be used as a guide.

You need to make sure any action you take is right for you.

Remember to:


  • Think about all your credit accounts
  • Think about how long it will take to pay off or reduce your debts
  • Think about how this affects your credit file

Whatever approach you take, make sure it is affordable.


  • Creating a budget to be sure
  • Download our budgeting form
  • Read our guide to budgeting

Need help with overdraft debt?

Get free, expert debt advice if you are struggling with your overdraft.